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The Internal Breadth of Nasdaq is flashing Red Light. By FiveStarCharts.com

The Nasdaq Composite has been the leader since the beginning of the bull market from 2009. It is very common to see market participants chase the technology sector and the high beta stocks at the top of the market. They may be late to the game.

Will you buy the dip again? By FiveStarCharts.com

Should you buy the dip in the next rally? I think this is a million-dollar question. Many technicians may blindly tell everyone to buy the dip again. I totally understand their technical views. Sometimes, trading is not about who is right or who is wrong. It is all about

Things could change drastically with a little twitter message! As a technician, I warned about this selloff last week with the bearish rising wedge pattern. This week we saw the outcome with the pattern...

Breadth Divergence could signal a “Double Top”. By FiveStarCharts.com

When will Crude Oil price turn bullish? By FiveStarCharts.com

Energy sector has been the worst sector among all the sectors in the S&P500. It has bounced back strongly with the stock market, but the overall performance is lagging the indexes. When will the bearish trend turn bullish? Here are the minimum requirements:

Can Corporate Buybacks continue to pump up stock price? By FiveStarCharts.com

Supply and demand for stocks are the key drivers of stock prices. In recent years, the total outstanding shares in the stock market has fallen substantially due to corporate buybacks. These buybacks have kept the market...

When the global economy falls into recession, bond yields always give us early warning signal before the stock market entering the bear market. Now it is time to take a longer view about the interest rates. Before each recession, the yield curve will...

Today is the Historical Moment-Yield Curve Inversion! By FiveStarCharts.com

After the US Federal Reserve announced there would be no interest rate hike in 2019 on March 20, 2019, in 2 days, the US 10-yr Treasury yield dropped below the US 3-month Treasury yield. The last time when this happened was...

Transportation Index reveals more corrections for the S&P500.

The rally from the December low has finally stalled out. The rally has taken out Line 1 and Line 2 resistance, but it has trouble to advance after piercing Line 3. At this level, S&P500 is facing resistance zone colored in yellow. This zone was the area where prices have been...

The Strongest Sectors in the S&P/TSX composite. By FiveStarCharts.com

The global stock markets are all near an extreme over-brought territory. It is the longest rally in the last 10 years. U.S. markets continue to be one of the strongest stock markets in the world. However, with a dovish Fed policy and a weakening US dollar, it may provide the best investment opportunities for...

Why 2019 is a year for gold investment? By FiveStarCharts.com

After the January FOMC meeting, Federal Reserve has turned to a dovish monetary policy. The new Dot Plot expects zero chance of a rate hike in 2019. This is totally opposite to what the Fed Chairman Jerome Powell said in the December FOMC meeting.

Take a closer look at the Yield Curve! By FiveStarCharts.com

The Federal Reserve’s recently communicated change in its outlook for monetary policy has led to concerns that the Fed’s policy influenced by political pressures. As we know, the Federal Reserve has continued to raise interest rate in December when...

Is the Bear Market Rally ended? By FiveStarCharts.com

The January market rally caused many investors to doubt about the validity of the bear market. The rally had 4 weeks steep rise of price with strong positive momentum created by the breadth thrust in early January. The breadth thrust was a 90% upside double volume accumulation day. The bull took over the control and drove price to retrace more than 61.8% of the last swing high. Many technical analysts called the end of the bear market and the bottom was in.

The RVX will give us signal to short the market. By FiveStarChart.com

The above chart is the Russell 2000. The bottom is the volatility index of Russell 2000 - $RVX. I like to short the small cap index in a bear market. The reason is very simple because it has the most volatile index during a bear market. Shorting requires different trading skills.

This Gold Chart Worth a Million Dollar. By FiveStarCharts.com

The above chart is the Gold Continuous Contract in the last 20 years. In a bear market, money flows into gold as a safe haven trade. In the last 20 years, after a parabolic blow-off top, gold had a major correction.

NAAIM Exposure Index is not oversold yet. By FiveStarCharts.com

n a bear market, an oversold situation could be extended to more oversold. That’s why if you try to find a short-term bottom, you better not. However, NAAIM Exposure index could give us hints about an oversold market.

Santa Claus Rally is at risk. By FiveStarCharts.com

S&P 500 2019 Forecast. By FiveStarCharts.com

If you are our blog follower, you probably have read all our bearish articles about the S&P 500 in 2018. 2018 did turn out to be a bad year for investors. Global stock indexes have performed poorly and most of them are already in a bear market.

Long-term Bond is the best Asset Class Now. By FiveStarChart.com

During a bear market, the best performing asset class is cash and long-term bonds. But when to buy is the most important question. Technical analysis can use relative studies to find the right timing...

The above chart is showing the long-term chart for the US 10-year treasury yield in the last 20 years. In October, the US 10-year treasury yield hit the 20 years declining trendline and reversed direction immediately. The red shadow zones represent...

The SPX Yield and SPX Earnings ratio reveals the Bear Market. By FiveStarCharts.com

When you watch BNN and Bloomberg TV, you find that many Market Strategists were afraid to call the bear market. We could understand their arguments like the yield curve, employment numbers, leading indicators are...

The Decline on FINRA Margin Debt level is the Bear Market Confirmation. By FiveStarCharts.com

Margin Debt level on the NYSE has been a good barometer as a contrarian indicator about the top of the stock market. FINRA provides statistics on monthly data regarding FINRA member firms margin account requirement and the total of all the debt balances in securities margin accounts.

How low WTI Crude Oil could fall? By FiveStarCharts.com

The long-term uptrend of WTI Crude oil is now broken. The fall was so fast and not many traders expected such move. This is a collective action done by major institutional sellers. We could call this move is A Wave impulsive move.

The Party is Over! By FiveStarCharts.com

It is time to revisit our long-term monthly chart of the Nasdaq 100 and the Dow Jones Industrial Average Ratio. The Nasdaq 100 has been outperformed the Dow since 2009 and it has been the leader among all the indexes.

Technology Sector is forming the top. By FiveStarCharts.com

Technology sector has been the leader in the S&P500. Since 2009, it has outperformed the S&P500 in most of the years. The FAANG stocks have been outperformed by a large degree than most of the indexes.

The Zahorchak Method has signaled the SELL signal for the TSX. By FiveStarCharts.com

The Zahorchak Methode (ZM) is a digital indicator who can provide a mechanical buy/sell signals based on Michael Zahorchak measures. The process of the ZM is the ongoing relationship of the 5, 15, and 40 week moving averages of the index and the weekly Advance Decline Line.

Why November is an important month for NYSE Composite Index? By FiveStarCharts.com

The October market crash has created many questions about the continuity of the U.S. bull market. The global stock market has already entered bear market in 2018. U.S. stock market cannot be isolated by itself much longer.

Is this the Beginning of the Bear Market or the End of the Bull Market correction? By FiveStarCharts.com

This is a billion-dollar question for many Market Technicians. No one can perfectly answer this question. Given the high volatility of global market in October, I try to give everyone the big picture from the monthly chart of the S&P500. At the same time, I want to use the NYSE McClellan Summation Index (Ratio Adjusted) to show how the tops of the market completed in the past.

What is the Market Breadth telling us? By FiveStarCharts.com

You have heard many market strategists and Investment Advisors calling the top of the US stock market in the last 3 weeks. The current correction has been well predicted from multiple Hindenburg Omen sell signals on the Nasdaq Index, the breadth divergence and the S&P500 yield level in my October Newsletter. Will this correction become a reversal of the secular uptrend?

Did you prepare for this kind of drop of the S&P500? By FiveStarCharts.com

The signs of a market correction which I called out at the end of September from my October newsletter have begun to play out last week. The sharp drop has been anticipated in my September and October newsletter as I pointed out the market was not in a healthy uptrend since April.

The 36 years Bond Bull Market is finally over! By FiveStarCharts.com

Since 2017, I have mentioned many times that the longest bond market bubble is near the end. The last bond bear market started in 1950 and ended in 1980. The bull market started in 1980 and ended in 2016. And today we finally witnessed this historical moment.

The Big Picture of the US dollar index. By FiveStarCharts.com

US dollar direction has major impact on almost all other markets. Strong US dollar hurts emerging markets, commodity prices, foreign currencies and all major US companies that do business aboard and receive foreign currencies as revenue.

What is the E/P of the S&P 500 telling us? By FiveStarCharts.Com

Everybody knows about the P/E ratio of the S&P500 which is the total dividend yield generated by the all the stocks in the S&P500. The above chart is not that complicated, the top is the S&P500 shown in 20 years, the middle is the US 10-year Treasury yield (blue shadow) and its KST (smoothed rate of change momentum indicator) and the bottom is the yield of the S&P500. For investors...

Late-Cycle Rotation- A Technical View. By FiveStarCharts.com

You may have heard from the media that many analysts mentioned that we are in the late-cycle of the US bull market. Most of them talked about higher inflation, rising interest rates, higher oil prices, low unemployment numbers… No one knows when this late-cycle will end...

Strong break-out from the Pharmaceuticals ETFs. By FiveStarCharts.com

Pharmaceuticals index is one of the strongest indexes as I mentioned in my September Newsletter. Although September is one of the weakest months in the year for the stock market, it doesn’t mean that we can’t find good investment during this period.

TSX Composite is testing the Fan Line Support. By FiveStarCharts.com

There are lots of internal weakness for the TSX Composite Index. The new high in July has never been confirmed by any internals. Only 53% of the stocks in the index are above the 200 days moving average.

The moment of truth of the US interest rate direction. By FiveStarCharts.com

The US economy is so strong due to the Trump tax cut. 80% of the corporate earnings report this quarter beat expectations. S&P500 made all time high today. If there is so much bullish sentiment out there, you want to see rising interest rate

Health Care sector is emerging as the best leading sector in the S&P500 By FiveStarCharts.com

Health Care sector is a defensive sector in the S&P500. When the S&P500 topped out in year 2000 and in year 2007. Health care sector rallied as the one of the strongest sectors with Utilities sector and the US long-term treasury bonds.

7-year Cycle of US dollar index with Assets correlation. By FiveStarCharts.com

The US dollar index has a major impact in almost all asset classes: Equities, Bonds, Commodities, Currencies, world trade in a macro picture. His cycle could be divided by every 7 years. In 2002, US index...

What Lumber Price is telling us about the US economy? By FiveStarCharts.com

The US-China trade war has killed the Copper bull market. By FiveStarCharts.com

The COPX- Copper Miner ETFs has violated a major horizontal support level last week. All the moving averages are now below the 200 days moving average. When price made a lower low and a lower high accompanied with the “death-cross” confirmation (50 days MV crossed 200 days MV). This is a classic bear market...

Bitcoin-Make it or Break it moment! By FiveStarCharts.com

In our February issue of our Five Star Monthly Newsletter for premium members, I have called the top of the Bitcoin may be in. Bitcoin lost almost 65% from the top. I am not calling the bottom here now...

The TSX Telecom sector is coming back. It means a lot! By FiveStarCharts.com

The TSX has been underperformed the global markets for the last few years. If we consider all the sectors in the S&P/TSX, not many sectors give you better technical pictures, except the information technology, discretionary and some of the REITs...

Strong Out performance of the Small Cap Health Care ETF! By FiveStarCharts.com

Semiconductor Trade War! By FiveStarCharts.com

Semiconductor index-$SOX has been the leader of the technology sector in US. Today China temporarily banned Micron technology’s chip sales, cutting the U.S. company off from the world’s largest semiconductor market. It is time to look at the technical for the $SOX to give us a clue.

Investment Opportunities from the U.S. and China Trade War. By FiveStarCharts.com

Investors are getting too complacent after February correction. By FiveStarCharts.com

Last week, I have pointed out that the S&P500 was near the horizontal resistance. We expected profit taking and volatility will come back at this level. Friday market sell off due to US-China tariff announcement kicked start the pullback when S&P500 near 2800. The question now is the market going to test the bottom again?

A Hawkish Fed with Strong US dollar Policy. By FiveStarCharts.com

The spread between the German bond yield and the US bond yield is widening. As the Fed raised its short-term rate by a quarter point yesterday as the market expected. The hawkish Feb signalled 2 more rate hikes is on the way, however the European Central bank delay their rate hike, it won’t raise any rate until the middle of 2019. This will allow the spread of interest rate widening even more in the next few months.

The impact of the rising of the US dollar for the world market. By FiveStarCharts.com

The US dollar index is ready to make a golden cross which means the 50-day moving average is about to cross the 200-day moving average. The implication on the macro trend of a rising dollar is problematic for the emerging market and the foreign currencies.

US regional banks outperformed Large cap banks can foretell macro trend. By FiveStarCharts.com

Bank stocks are very important for the stock market. Mega big banks like JP Morgan, one of the largest banks in the world and it is the major component in the XLF, is currently underperforming the S&P500 and the regional bank ETF: KRE. If US dollar continues to outperform the foreign currencies...

Crude Oil Pulled Back- Buy the Dip. By FiveStarCharts.com

Crude Oil pulled back below the 50-day moving average, but remains above the 200-day moving average. The current sharp pull back is nothing but noise in a bullish uptrend. Since oil formed “the bottom” in 2015, oil has been trading quite volatile. Especially, oil stocks have been trading even more volatile than crude oil itself.

S&P Small Cap internal breadth has confirmed the bull market By FiveStarCharts.com

Although S&P500 Equal Weighted Index is still trading in a range, the small cap has already made a new high. When we compare the new highs of the S&P500 and new highs of the S&P Small Cap index, the S&P Small Cap index has already shown 60% of the stocks are making new highs.

Russell 2000 Closed at New Highs – By FiveStarCharts.com

The Russell 2000, the small cap index closed at a new all time high yesterday is a good sign that the market correction is ending. During the consolidation, the Russell 2000 didn’t breach the 200-day moving average. The small cap index is a risk barometer for investors.

The bounce of utilities sector is near the end. By FiveStarCharts.com

Fivestarcharts.com has issued a short signal on the utilities, REITs and long-term bond since 2017. The US 10-year Treasury yield is back to 3% after a minor correction. Utilities sector has a nice bounce from January low. However...

What will be the impact for Emerging market stocks if US dollar has turned around? By FiveStarCharts.com

US dollar index has been in a downtrend since 2017. If you invested in emerging market and foreign currencies, you already have made a very nice profit. Because during the downtrend of the US dollar index, foreign market has outperformed US stock market if you use the SPY/ACWI ratio to compare, you can see it very clearly. However, the recent bounce of the US dollar index from the support level is giving a warning signal on ...

Is this market correction near the end? By FiveStarCharts.com

To answer this question, we need to study the historical data from a quantitative perspective. According to Stock Almanac, a normal decline between 10 to 20% since 1945 has lasted an average of 4 months and the average of percentage loss is 13%. The average time to recover the loss takes about 3 months.

iShares 20+ Year US Treasury Bond ETF – A MEGA Head & Shoulder is completing. By FiveStarCharts.com

A text book head and shoulder pattern is perfectly showing on the iShares 20+ Year US Treasury Bond ETF (TLT). This Mega H&S pattern took more than 4 years to form which means the pattern has a high degree of accuracy and more likely to trigger the mega crash. The pattern is nearly perfect because the right shoulder is lower than the left shoulder and distribution volume is higher.

Hedged or Not Hedged? By FiveStarCharts.com

Hedged or Not Hedged? This is probably the best question to ask for next few days. The S&P500 has regained the 50 days and the 200 days moving average. You may have heard from many market commentators that the correction is over and this is the time to look for buying. I would say “Not too fast”. Here are the remarks:

Dow Jones US Airlines Index is in topping process! By FiveStarCharts.com

Airline stocks have been a good performing sector in the S&P500. Railroad, trucking and airlines are very important sectors for the Dow Jones Transport index. The Dow Theory requires the Dow Transportation Average (DJTA) must confirm all the tops and bottoms with the Dow Jones Industrial Average (DJIA).

What is Stock/Gold Ratio forecasting next for the stock market? By FiveStarCharts.com

You must remember back in 2016 before the US election. The stock market had all the ingredients to become a major bear market. What I found interesting is the stock/gold ratio plays very well in forecasting the downturn.

SPY Resistance and Support -By FiveStarCharts.com

After 2 months of correction, it is about time to take a close look at the support and resistance of the SPY. I have predicted a “W” shape bottom back in February, it turned out the pattern is quite like a “W” shape, but a very complex “W” shape.

Is US retail making a big come back? By FiveStarCharts.com

In 2017, one of the worst sector to invest is the US retail sector. We had a raging bull market in 2017, however the retail sector was not participating. The media was promoting the end of the US retail business because...

The Next Financial Crisis-TRADE WAR or QT! By FiveStarCharts.com

In our technical studies, we barely study the “Why” because we only care about the price action. So, I don’t talk much about any reason why the stock market suddenly changed to a volatile market. Stock market is no longer driven by earnings recently. Stock market now focuses on

The Big Cycle Picture on the S&P 500 -Be very cautious! By FiveStarCharts.com

A normal business cycle is about four and half years and it is called cyclical cycle. But in a secular long-term uptrend, it could be 3 times or even 4 times business cycle within a large cycle. Each cycle will go through 4 phases: Accumulation, Mark-Up Phase, Distribution Phase and Mark-Down phase.

Don’t Touch This! Oil & Gas stocks By FiveStarCharts.com

Energy sector is the weakest sector among all sectors in the February crash. Energy stocks haven’t bounced back at all if we look at XOP and XES. Both ETFs are still trading at the bottom of the range. The divergence...

The Dow and the S&P500- 2 different patterns have formed By FiveStarCharts.com

After the sharp sell off back in February, the U.S. market has bounced off the low from February 9. The Dow Jones Industrial Average has formed a symmetric triangle which represents a period of consolidation before the price is forced to break out or break down. If a break down happens,

What does a “W” shape bottom look like from now to the end of the March?

I have mentioned in the last blog that a “W” shape bottom will be more likely developing right now. You can find in the last 20 years, the “W” shape bottoms were pretty much the norm in most of the major market correction of 10% or more. In 2016, 2015,2011,2007, the correction normally took 2 months to complete. So, we are only in the early phase of the correction, and we should expect the market will test the low in the first 2 weeks of the March.

Buy on Dips on Sell on Rallies?

Market correction usually takes 2 forms: A immediate “V” shape recovery or A gradual “W” shape recovery. Can we say we are absolutely in a market correction phase? Not necessary! WE COULD BE ALSO AT THE BEGINNING OF A TRANSITION PHASE FROM BULL TO BEAR MARKET. If you are just a retail adviser, how can you spot that the market is changing trend. Here I can just somethings to keep you await at night:
When market tops out:
Speculations are everywhere in the market: ex. Bitcoin, Marijuana stocks. CHECKED
Margin Debt: Highest level in history. CHECKED
Bullish Sentiment: All Time High. CHECKED
High Valuation: Technology stocks. CHECKED

Chinese Stock Market Could be in Serious Trouble.

The last week global stock market crash was intensive. Technically, one market has serious technical damage. The Shanghai Stock Exchange Composite Index has violated the long-term uptrend line from 2016. Chinese market has been always very volatile in the last 15 years. The violation of trend line is critical because the big picture of the Shanghai index has become a large A-B-C pattern. The big drop in 2015 was impulsive, the wave structure was fast and intensive. This time the wave structure is also very impulsive, so we could say the B wave was a corrective wave. We are going to see a Five Wave Structure on the downside which means we are going to see very volatile market.

How to call a short term bottom by using the volatility index?

Calling a bottom is not an easy thing even you are a professional trader. When the Dow was down over 1200 points, amateur investors were afraid and pushed the sell button with high volume trading. Today’s stock market, 50% of the volume are trading by computers.

Buy Alert on Katanga Mining- KAT.TO (TSX)

Katanga Mining- KAT.TO (TSX)
Entry Price: $1.68
Target: $3
Stop loss: $1.30
Risk: High
Katanga Mining -KAT.TO is a mining company operating in Congo claims to have the potential of becoming Africa’s largest copper producer and the the world’s largest cobalt producer. Technically speaking, KAT.TO retraced back the gain from $2.83, the price has respected the horizontal support which is around $1.50.

What is the US dollar and Japanese Yen relationship forecasting the direction of US stock market?

The currency market is much bigger than the stock market. NYSE is now about 18 trillion total market capitalization, the currency market trades about 4 trillion a day. USD/YEN relationship in the last 20 years has been the main driver of the Yen carry trade in the forex market.

Hudbay Mineral – Such a good looking chart By FiveStarCharts.com

Most investors don’t really have time to study long term charts, like monthly candlestick chart on 10 years for a chart like below. You can see this stock has experienced multi years horizontal consolidation in a total of 6 years. However, last month investors on this stock made a decisive decision to bring the stock price above the long term monthly horizontal resistance which is around $15. This is a bullish and collective push that it shows buyers are ready to push the stock price higher after long term accumulation phase.

Which Canadian company is technically ready to go a lot higher for many years to come?

Most investors don’t really have time to study long term charts, like monthly candlestick chart on 10 years for a chart like below. You can see this stock has experienced multi years horizontal consolidation in a total of 6 years. However, last month investors on this stock made a decisive decision to bring the stock price above the long term monthly horizontal resistance which is around $15. This is a bullish and collective push that it shows buyers are ready to push the stock price higher after long term accumulation phase.

ALL EYES ARE WATCHING-US 10 YEARS TREASURY YIELD

US 10-year Treasury yield is approaching 2.62% which is the 2017 high. This is confirming one of our blog message and our research, when I posted a blog message back in Oct. 2017 “Should you own more US banks now during the earnings report?” I have mentioned that the market was going into a phase of sector rotation from technology to energy. From October until now, banks and energy has become the leaders of the US market. Chart 2 is showing XLF is outperforming the $SPX.

Buy Alert on Gilead Sciences- GILD (NYSE)

Gilead has completed the first leg of correction. It pulled back from $85 to 70. Our members must recall that we play this stock quite successfully last year when we traded the break out from Aug. 09. Check out our closed position page:

Buy Signal

1. Buy Alert on Ecopetrol SA -EC (NYSE)
Entry Price: $14
Initial Target: $23
Second Target: $28
Stop Loss: $10
Risk: Medium to High
Ecopetrol -EC (NYSE) is our premium member’s pick back in December. EC has finished an horizontal consolidation which lasted for 2 years. EC started to break the resistance line in October with extremely strong volume and momentum. Although EC has risen almost 50%, EC still have a long way to go to hit my first target. It may have some consolidation between $15 to $16, but it could be only temporary. This is one of the strongest momentum stock in the energy sector.

Time to review the 2017 Profit from Five Star Charts.com

2017 was a good year for many US investors. Our Premium Portfolio focused on US equities has delivered better average returns than the Standard members. However, the model portfolio has been created since September 2016 for Premium members. So it is not enough time to justify the actual return yet. Our premium portfolio will always guide you into the strong sectors and the leaders of the stock markets.

Watch Out! Market is too complacent.

The CBOE pull/Call ratio is showing extreme buying on call options in December which is a contrarian signal that the market has topped out in the short term. With the iShares High Yield Bond ETF underperformed the Investment Grade Bond ETF for since April. (HYG vs. LQD). I think as cautious money managers will take profit soon. This long rise of the Dow Industrial and Nasdaq was showing negative divergence in December. The high return leadership sector like Semi-conductor stocks – SMH has been topped and reversed down at the end of November which is a bad signal that the leaders are given up their rally. If you are money managers, it is so easy to push the sell button to safekeep your gains during the whole year. However, as market is so complacent now. Any serious sell off will bring a correction immediately.

Gold has more downside to come vs USD is getting stronger

My last blog message gave a warning signal about gold. This week gold has violated trendline support. As I suspected US dollar is not yet completed the zig-zag bounce which means gold has more downside risk to come in the next few weeks. This is not a good sign for commodities in general. Now gold could bounce back to $1258 and resume the down trend. For short sellers, this is the area to short gold. If $1258 is taken out, gold could resume the sideway action. Gold is largely affected by the strong USD.

Commodities could be in trouble

Commodities could be in trouble
The CRB index has declined substantially in December. Copper broke $3 support level. Oil is testing the $55 level. Gold just broke down from a head and shoulders pattern. It is time to look at the Intermarket relationship now.
CRB Index

If you a smart investor, you should read this ratio constantly to get you a clue what this market sentiment is. XLP – Consumer staple sector ETF is a low growth and high dividend sector (Defensive). XLK – Technology sector ETF is a high growth, high risk and zero dividend sector (Aggressive). If you put these 2 sectors together and create a ratio. The slope of the ratio can tell you how the market sentiment is and reflect the risk level of the market. You could see the chart below:

If you a smart investor, you should read this ratio constantly to get you a clue what this market sentiment is. XLP – Consumer staple sector ETF is a low growth and high dividend sector (Defensive). XLK – Technology sector ETF is a high growth, high risk and zero dividend sector (Aggressive). If you put these 2 sectors together and create a ratio. The slope of the ratio can tell you how the market sentiment is and reflect the risk level of the market.

Buy signal on Avigilon Corp (TSX:AVO)

Avigilon Corp (TSX:AVO) is a provider of business intelligence and security solutions. It designs, manufactures and market video surveillance and access control software and equipment. It announced record earnings today. The stock gaped up and gained almost 9.72% today. The gap could be a runaway gap. Support is at $17.72. The weekly chart is showing a break out of inverse and shoulder pattern which gives a target of $35. Short term pullback is unlikely.

Buy signal on Pengrowth Energy (TSE:PGF)

Pengrowth Energy-PGF.to rallied strongly in September and spent one month in October to consolidate. The pattern is a flag formation which is a continuation pattern. Price could break the $1.50 resistance line and start a new uptrend. The move from the bottom is very impulsive, so I expect the same movement from $1.50 to $2.30. The stock is so cheap as you can see it is trading only 0.72 book value and the debt level is only 0.69. This stock will survive from low oil price.

The Critical Moment for Energy is Coming

FiveStarCharts.com has issued the buy signal of energy service companies back in September 15th this year. That day marked the bottom for most of the oil service companies since January. Now, oil weekly chart is currently dealing with a key long-term resistance line as the chart below shows:

Should you own more US banks now during the earnings report?

US banks starts announcing their earnings this week. Many investors and portfolio managers are interested to see if they should buy more US banks. Here at FiveStarCharts.com, we teach you how to make your right decision to investing. There are many factors why the banks will rise. Here are the few good reason:

Buy signal on Westport Fuel Systems Inc (TSE:WPRT)

Westport Fuel Systems Inc (TSE:WPRT) has completed the inverse head and shoulder pattern with strong volume break out to the upside. The bottom has formed with strong momentum trading. Now the price can reach first target $8 and second target is $12.

Which energy stocks to play in this rally?

Energy service sector is the most attractive sector for investors to make money in this rally. Last year, the big gain was made from Trican Well Service Ltd (TCW.to). This time, Cathedral Energy Services Ltd (CET.to), Calfrac Well Services (CFW.to), Paramount Resources Ltd (POU.to) and Questerre Energy Corp (QEC.to - speculative) will be in focus. They are all included in our opened position now. Here is the technical chart:

Crude Oil finally shows the Buy Signal

FiveStarCharts.com/blog
West Texas Intermediate (WTI) crude oil broke $50 today and resumed the uptrend. The bottom is a inverse head and shoulder pattern. I can see oil could trade around $55 to $56 by year end.

How to deal with Currency risk?

Since April this year, the USD/CAD dropped from 1.37 to 1.208 now. It was a drop of 11.8%. Did your portfolio generate 11.8% in the last 4 months. If you are Canadian investor, your portfolio was hurt badly by the currency exchange. Have you consider how to hedge your currency risk? Five Star Charts recommended the best way to hedge risk is having a US dollar currency trading account instead of using CDN currency trading account. The other way is to use the currency hedged ETF to mitigate the risk of declining US dollar. Our website will soon provide premium membership with the investment list of currency hedged ETFs. But now let’s look at our research on the us dollar.

Gold breaks out, is it a buy?

Finally, this triangle is ending. Gold made a break out to the upside. GLD, the ETF of Gold needs to break the last high $131.15 to justify this break out. This is the first time gold is outperforming S&P 5000 since 2011. Let's see this spark can catch the fire.

Opened position on Gilead Sciences Inc. – NASDAQ:GILD

Gilead Sciences Inc. seems a turnaround story, the moment has recently reversed from the down to up. A beautiful breakout in June and now the stock is outperforming S&P500. Buy the right at the time is important. US Biotech currently is the leading sector, Gilead is a major component of the health care sector. I could see this one going back to $82 and even $95 level in near term.

A pending US market correction is on the way

Seasonality speaking, we can entering the summer boring trading season. In US, the Dow keeps making all time high, but the rest of the index like Nasdaq, S&P500, Russell 2000 couldn’t make new highs. It is about time to look at the bond markets and see what bonds are telling us.

The Chicago Board Options Exchange (CBOE) Put/Call ratio UPDATES

The CBOE Put/Call ratio is telling us the market is vulnerable in the short term. The CBOE Put/Call ratio is a contrarian sentiment indicator. It gauge the overall mood of the market. As the ratio increases, it means the investors are putting their money into put options rather than call options. An increase in call options signals that investors are well to bullish and speculate that the market will move higher.

Copper is leading all the commodities

The industrial miners and the material sector has experienced quite a correction in the first half of the year. Now, it seems this correction is over as you can see copper is breaking a short term and long term resistance.

WATCHLIST Updates - Guggenheim Solar ETF (NYSE:TAN)

Take advantage of Rising Canadian dollar

Most investors will invest in energy stocks, mining stocks when they see the Canadian dollar is rising. The recent rise of the Canadian dollars surprised a lot of investors and made them to think how to invest in a rising rate environment in Canada.

Market Sell off due to Rate Hike- Should you buy or sell?

The rate hike of ¼ point brought lots of volatility into the global stock market. Nasdaq has dropped the most and GS said the tech sector is well over valued. Everyone knows the tech sector and the small cap
sector are way over valued, but is the uptrend ending here?

Dow Transport vs. Dow Industrial

The Dow Transport Index has not confirmed the recent high of the Dow Industrial Average Index. The Dow Industrial has topped out in March around 21000 and since then the top has not been tested. A flat top is normally bearish. When we look at the Dow Transport, the divergence is clearly shown on the second chart. A lower and a lower high. According to the Dow Theory, this divergence is enough to tell the next move the industrial index. So, we should see some type of correction at the end of May.

Gold & Silver Miners ETFs

Last week I talked about US dollar could break down and it happened this week. So gold and silver both are moving fast to the upside. However, the conviction to buy the gold and silver miners ETFs is not very strong, the reason is mining stocks haven’t outperformed the commodities price. Now, silver miners ETF is facing major resistance at the moment. If silver can clear this major hurdle, this is clear sky to trade the miners ETFs. Watch out closely.

US Dollar is in critical week

US dollar has been the major focus for the last few years. The Fed raised interest rate in March and the US dollar reversed to the down side. The Gap was filled last week. Now this chart is very interesting because it is time for US dollar to show which way it wants to go. A fake break out usually will have more down side. If the US dollar breaks down from this little head and shoulder pattern, we should see Japanese Yen and Euro dollar rally. The emerging market will rally and the commodities should rally as well. Interesting time ahead!

Time To Buy Energy Stocks

Seasonally, we are entering the summer driving season, refiners are forced to buy oil to prepare for the summer driving demand. However as a technical analyst, I don’t look at the fundamental reason. Last year, our top gainer in the energy service sector like TCW.to now looks like it is ready to buy again. This year, smaller oil service companies, like Cathedral energy service, is poised to go higher. After 2 months accumulation with strong volume, this stock is ready to rock n roll.

Where Is The Next Big Move?

Last blog I mentioned we got to watch closely the emerging market, US market has been very strong in the last few years. But this may about to change, EEM is showing a long term change of momentum to the upside. It is going to test the upper resistance soon and the chart below is the ratio between S&P500 against the Emerging market EEM, if the ratio is going down that means the S&P500 is no longer outperforming than EEM.

Emerging Markets Are Ready To Test Resistance

The S&P500 has been outperforming many foreign markets since 2011. The main reason is because the strong US dollar attracts foreign money to flow into the US market. A strong US dollar has a big impact on commodities, foreign currencies and emerging market economies. Rising interest rate in US and strong US dollar can badly hurt emerging markets like Brazil, India, Indonesia, South Africa, etc…